Eiji Saito, portfolio manager on the JPMorgan Japan Smaller Companies Trust (JPS), explains the case for its position in Bengo4.com.
On the ground in Japan, we see several structural trends that we identified as long-term resilient sources of return for Japanese companies. Some of the trends are accelerating in 2020 due to the situation around Covid-19, especially in the area of automation and information technology. These trends provide many interesting investment opportunities for bottom-up investors like us.
Although Japan is very advanced in some areas, it lags in others, sometimes surprisingly so. Office digitalisation is a prime example of this. In many Japanese companies’ offices, IT systems are old, and paper-based office work is still common. Japan is, however, following exactly the same pattern as countries like the United Kingdom, and the changes are accelerating due to the situation caused by Covid-19.